Merrill Not Alone in Banning Bitcoin Trading

January 8, 2018

Merrill Lynch isn’t the only brokerage that prohibits its advisors and clients from trading in Bitcoin and its derivatives, but several large firms, including rival Morgan Stanley, are looking into allowing trading in Bitcoin futures, Investopedia writes.

Merrill Lynch banned trading in the over-the-counter Grayscale Investment Trust Bitcoin fund firmwide in December, extending a ban that already applied to Bitcoin futures. The wirehouse does allow customers in brokerage accounts to keep existing positions in the Grayscale fund, but not clients in fee-based accounts. Wells Fargo & Co., the Royal Bank of Canada and Morgan Stanley have similar bans on products tied to cryptocurrencies, according to Investopedia. UBSGroup AG opted against offering Bitcoin products citing their high transaction fees and volatility, the financial terms website writes.

Large financial firms are reluctant to allow clients to trade Bitcoin because of lack of regulation in the markets and high volatility, Investopedia writes. But clients with high risk tolerance could be attracted to such volatility, according to the website.

And the rollout of Bitcoin futures contracts has brought “a semblance of regulation” to the product, Investopedia claims. TD Ameritrade already allows Bitcoin futures trading. Goldman Sachs, meanwhile, is setting up a cryptocurrency trading desk, according to Bloomberg. And even Morgan Stanley is reportedly looking into allowing Bitcoin futures trading for its wealth management clients, Investopedia writes.